The developments in Information and Computer Technology (ICT) have brought number of innovations as digital banking products. These products provide the convenience in accessing banking needs of the customers, anywhere and anytime. It makes the banking services available to mass at the lowest cost. Each bank is developing its own digital products to serve the customers and to acquire new customers. As of February 2017 Banks have deployed 2,07,402 ATMs and 22,24,977 Point of Sale (PoS) terminals. To make an ATM of a specific bank, accessible to any bank customer there is a need for establishing connectivity among the bank servers. This connectivity is made possible through ATM Switch. This is called as interoperability. This is result of creation of common digital infrastructure, which is useable by every member bank. National Payments Corporation of India (NPCI) has been building this digital infrastructure.
NPCI is a body promoted by RBI and has presently ten core promoter banks (State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC).NPCI, an umbrella institution for all the Retail Payment Systems in the country was incorporated in 2008.
The core objective was to consolidate and integrate the multiple systems with varying service levels into nation-wide uniform and standard business process for all retail payment systems. The other objective was to facilitate an affordable payment mechanism to benefit the common man across the country and help financial inclusion. NPCI is aimed to operate for the benefit of all the member banks and their customers. NPCI has developed/ operating the following digital infrastructure:
National Financial Switch- NFS:
In August 2003, IDRBT has developed NFS to link together the country’s ATMs in a single network. The NFS consisted of an inter-ATM switch and an e-commerce payment gateway.With the untiring efforts of Indian Banker’s Association (IBA), NFS was taken over by NPCI on 14 December 2009. This NFS facilitates the seamless ATM transactions.
IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile phones.IMPS is an emphatic tool to transfer money instantly within banks across India through mobile, internet and ATM which is not only safe but also economical both in financial and non financial perspectives.This facility is provided by NPCI through its existing NFS switch.The Banks approved by RBI for mobile banking service are allowed by NPCI to participate in IMPS.
IMPS enables bank customers to use mobile instruments as a channel for accessing their bank accounts and to remit funds.It makes payment simpler just with the mobile number of the beneficiary. It builds the foundation for a full range of mobile based Banking services.
The vision of NPCI being able to provide citizens of our country anytime, anywhere payment services which are simple, easy to use, safe, and secure, fast and also cost effective. NPCI aims to operate for the benefit of all the member banks and the common man at large.
RuPay, a new card payment scheme launched by the National Payments Corporation of India (NPCI), has been conceived to fulfill RBI’s vision to offer a domestic, open-loop, multilateral system which allows all Indian banks and financial institutions in India to participate in electronic payments.
“RuPay”, the word itself has a sense of nationality in it. “RuPay” is the coinage of two terms Rupee and Payment. “RuPay” has the benefits of low cost and affordability, customized product offering, inter-operability between payment channels and products & protection of information related to Indian Consumers.
“RuPay” cards were launched in March 2011. “RuPay” cards are issued as debit card, credit card & prepaid cards. In PMJDY accounts as of Nov2016, 19.36 crore “RuPay” cards issued. NPCI has already achieved a milestone of 300 million “RuPay” cards in circulation. Number of consumers using “RuPay” cards on PoS and e-comm are also growing substantially.
National Payments Corp. of India through RuPay cards along with MasterCard, Visa and American Express—under instructions from the Reserve Bank of India (RBI), could jointly develop BharatQR, a Quick Response Code to enable digital payments without card swiping machines/ Point of Sale( PoS).
It is a common technology platform developed by NPCI which allows the Banks and TSPs (Telecom Service Providers) to seamlessly integrate with each other to provide banking services to the customers at large over the mobile phones (basic as well as Smartphone).
One of the innovative payment service launched by NPCI includes *99# service, which works on Unstructured Supplementary Service Data (USSD) channel. This service was launched envisioning the potential of Mobile Banking and the need for immediate low value remittances which will help in financial deepening and inclusion of underbanked society in the mainstream banking services. *99# service was dedicated to the nation by the Honorable Prime Minister of India ShriNarendraModi on 28th August 2014 as part of PradhanMantri Jan DhanYojana (PMJDY).
*99# service has been launched to take the banking services to every common man across the country. Banking customers can avail this service by dialing *99#, a “Common number across all Telecom Service Providers (TSPs)” on their mobile phone and transact through an interactive menu displayed on the mobile screen. Key services offered under *99# service include, interbank account to account fund transfer, balance enquiry, mini statement besides host of other services. *99# service is currently offered by 43 leading banks & all GSM service providers and can be accessed in 12 different languages including Hindi & English. *99# service is a unique interoperable direct to consumer service that brings together the diverse ecosystem partners such as Banks & TSPs.
Features of *99# Service:
- Works without Internet – Uses voice connectivity
- Round the clock availability (works even on holidays)
- Accessible through a common code *99# across all TSPs
- Works across all GSM service providers and mobile handsets
- Additional channel for banking and key catalyst for financial inclusion
- Service also offered through BC Micro ATMs to serve the rural populace
*99*99# is a USSD based value added service from NPCI that facilitates the customers to check the status of his/her Aadhaar number seeding/linking in the bank account. The service works across all GSM service providers and brings together the diverse ecosystem partners such as Banks & TSPs.
Considering that various subsides and benefits of the State and Central Government schemes under the Direct Benefit Transfer (DBT) programme are being doled out on the basis of Aadhaar number of the beneficiary; this service has proved to be a convenient mechanism for the users to ascertain his/her Aadhaar seeding/linking status in the bank account.
Cheque Truncation System (CTS):
CTS Clearing was implemented by RBI in the National Capital Region (NCR), New Delhi on 01.07.2009. Subsequently RBI entrusted CTS operations to NPCI since 10.12.2013. Now Grid-based CTS in New Delhi, Mumbai & Chennai grids are managed by NPCI, which takes care of the processing of cheques among different banks.
National Automated Clearing House (NACH):
National Automated Clearing House (NACH) is a centralised system, launched with an aim to consolidate multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices and removes local barriers/inhibitors. NACH system provides a national footprint covers the entire core banking enabled bank branches spread across the geography of the country irrespective of the location of the bank branch.
NPCI has implemented “National Automated Clearing House (NACH)” for Banks, Financial Institutions, Corporates and Government a web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature. NACH System can be used for making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension etc. and also for bulk transactions towards collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc.
With the implementation of NACH system, NPCI intends to provide a single set of rules (operating and business), open standards and best industry practices for electronic transactions which are common across all the Participants, Service Providers and Users etc. NACH system also supports Financial Inclusion measures initiated by Government, Government Agencies and Banks by providing support to Aadhaar based transactions.
The NACH system facilitates the member banks to design their own products and also addresses specific needs of the banks & corporates including a refined Mandate Management System (MMS) and an online Dispute Management System (DMS) coupled with strong information exchange and customised MIS capabilities.
The NACH system provides a robust, secure and scalable platform to the participants with both transaction and file based transaction processing capabilities. It has best in class security features, cost efficiency & payment performance (STP) coupled with multi-level data validation facility accessible to all participants across the country.
Aadhaar Payment Bridge System (APBS):
NACH’s Aadhaar Payment Bridge (APB) System, developed by NPCI has been helping the Government and Government Agencies in making the Direct Benefit Transfer scheme a success. APB System has been successfully channelizing the Government subsidies and benefits to the intended beneficiaries using the Aadhaar numbers. The APB System links the Government Departments and their sponsor banks on one side and beneficiary banks and beneficiary on the other hand.
Aadhaar Enabled Payment System (AEPS):
AEPS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication.
The four Aadhaar enabled basic types of banking transactions are as follows:-
- Balance Enquiry
- Cash Withdrawal
- Cash Deposit
- Aadhaar to Aadhaar Funds Transfer
The only inputs required for a customer to do a transaction under this scenario are:-
- IIN (Identifying the Bank to which the customer is associated)
- Aadhaar Number
- Fingerprint captured during their enrollment
Aadhaar-enabled payment system, or Aadhaar Pay, is an app for merchants which will enable them to receive payments through biometric authentication of the customer, provided their bank accounts are linked to their Aadhaar number. The biggest advantage through this method of payment is that the customer does not need a credit or debit card, or even a smartphone.
A pilot was conducted in fair price shops in Andhra Pradesh where shopkeepers are accepting payments from PDS beneficiaries to test the systems. The idea takes off from the existing Aadhaar-enabled payment system (AEPS) used by bank business correspondents (BCs) in rural areas to disburse and accept cash, using micro ATMs.
Unified Payments Interface (UPI):
Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.
- Immediate money transfer through mobile device round the clock 24*7 and 365 days.
- Single mobile application for accessing different bank accounts
- Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment.
- Virtual address of the customer for Pull & Push provides for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc.
- Bill Sharing with friends.
- Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount.
- Merchant Payment with Single Application or In-App Payments.
- Scheduling PUSH and PULL Payments for various purposes.
- Utility Bill Payments, Over the Counter Payments, Barcode (Scan and Pay) based payments.
- Donations, Collections, Disbursements Scalable.
- Raising Complaint from Mobile App directly.
Bharat Interface for Money (BHIM):
Bharat Interface for Money (BHIM) is an app that lets users make simple, easy and quick payment transactions using Unified Payments Interface (UPI). Users can easily make direct bank to bank payments instantly and collect money using just Mobile number or Payment address. Service available is as follows:
- Send Money – Using this option, users can send money to anyone using Virtual Payment Address (VPA), Account no & IFSC and QR Scan.
- Request Money – Using this option, users can collect money by entering Virtual Payment Address (VPA). Additionally through BHIM App, one can also transfer money using Mobile No. (Mobile No should be registered with BHIM or *99# and account should be linked).
- Scan & Pay- Using this option, users can pay by scanning the QR code through Scan & Pay & generate their QR (Quick Response) code.
- Transactions – Using this option, users can check transaction history and also pending UPI collect requests (if any) and approve or reject. Users can raise complaint for the declined transactions by clicking on Report issue in transactions.
- Profile – Using this option, users can view the static QR code and Payment addresses created. Users can also share the QR code through various messenger applications like WhatsApp, Email etc. available on phone and can also download the QR code.
- Bank Account – Using this Option, users can see the bank account linked with their BHIM App and its PIN status. Users can set/change their UPI PIN. Users can also change the bank account linked with BHIM App by clicking Change account provided in Menu. Also they can check Balance of their linked Bank Account by clicking “REQUEST BALANCE”.
Bharat Bill Payment System (BBPS):
Bill payment is a major component of the retail payment transactions in India, and is characterized by the presence of large number of billers, who provide a variety of payment options to their customers. According to information available on the RBI website, the top 20 cities are generating INR 6,223 billion in bill payments every year – and over 70% of these transactions are still predominantly being carried out by cash or cheques. In addition, the present bill payment infrastructure in India is largely biller-specific in terms of modes of payment accepted and channels supported, and is still to support an ‘anytime, anywhere’ payment option to customers.
These opportunities have been identified by various organizations that have aggregated various billers to provide a single platform to make all these payments. As the next logical step in the evolution of the bill payment ecosystem, there is a need for an integrated bill payment system in the country that offers interoperable and accessible bill payment services to customers through a network of agents, allows multiple payment modes and provides instant confirmation of payments.
The Bharat Bill Payment System (BBPS) will function as a tiered structure for operating the bill payment system in the country under a single brand image. National Payments Corporation of India (NPCI) will function as the authorized Bharat Bill Payment Central Unit (BBPCU), which will be responsible for setting business standards, rules and procedures for technical and business requirements for all the participants. NPCI, as the BBPCU, will also undertake clearing and settlement activities related to transactions routed through BBPS. Existing bill aggregators and banks are envisaged to work as Operating Units to provide an interoperable bill payment system irrespective of which unit has on-boarded a particular biller. Payments may be made through the BBPS using cash, transfer cheques, and electronic modes.
The BBPCU will not own any transaction financially from a payment system perspective, working only as a medium to connect multiple billers and agents through various Operating Units. In addition to setting standards and ensuring transaction security for the entire ecosystem, it will also ensure that queries, requests and complaints raised by customers are monitored and resolved on time. The BBPS will act as an independent brand and is expected to increase the confidence level of the customers with respect to transaction convenience, security, reliability, accessibility and affordability. NPCI has already launched Pilot Project for BBPS.
Interoperable Bunch Note Acceptor (BNA)/ Cash Recycler:
The Banks have deployed BNAs at branches, these machines at present cater only to the specific banks own customers. Now NPCI has offered ‘Interoperable Cash Deposit (ICD)’ service in NFS (National Financial Switch). This enables the banks to deploy the BNA/ Cash Recycler with ICD feature, which can accept the cash in the account of any bank customer. Union Bank of India is the first bank to introduce Interoperable Cash Deposit Machine.
NPCI has created digital infrastructure to facilitate inter-operable transactions among the different banks. NPCI has developed various products to play an instrumental role in moving cash-intensive society to less-cash one. This year NPCI has planned to launch National Common Mobility Card (NCMC) which can be used in all metros, buses and suburban trains in an interoperable way. NPCI specifications on NCMC have been adopted for BMTC bus rides in Bengaluru. Similarly, there are plans to use Tag based toll gate payment (ETC-Electronic Toll Collection), which will enable the vehicles to move freely through the toll gates.
The digital infrastructure and the products created by NPCI facilitated the process of demonetization by Govt. of India. Cashless transactions through Unstructured Supplementary Service Data (USSD) for GSM phones, e-wallets, UPI and BHIM for smart phones and debit, credit and prepaid cards for PoS machines will facilitate the electronic payments by every section of society. NPCI is developing a metric to assess the extent to which electronic payments have gone universal in India and ensures every Indian has access to electronic payments in secure, convenient and affordable way.